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HomeMy WebLinkAboutR07-088 Down Payment Assistance Program Adoption . . \: ~ Commissioner ~... . - moved for adoption of t~solution: BOARD OF COUNTY COl\;Il\USSIONERS COUNTY OF EAGLE, STATE OF COLORADO RESOLUTION NO. 2007-~CZ$ RESOLUTION ADOPTING EAGLE COUNTY DOWN-PAYMENT ASSISTANCE PROGRAM WHEREAS, Eagle County, Colorado is a political subdivision of the State of Colorado, duly organized and existing pursuant to the laws and the Constitution of the State; and WHEREAS, median housing prices in Eagle County have risen dramatically in the last several years, with a marked increase from 2005-2006; and WHEREAS, this increase has made purchasing a home in Eagle County materially less affordable to Eagle County employees; and WHEREAS, making housing affordable to Eagle County employees is important to recruiting and retaining them; and WHEREAS, the Board of County Commissioners of the County of Eagle, State of Colorado (hereinafter "the Board") wishes to promote home ownership among its employees in order to foster community and longevity among its employees; and WHEREAS, to effect homeownership, the County wishes to provide financial assistance to its employees in the form of down-payment assistance through a pilot program; NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF EAGLE, STATE OF COLORADO: THAT, the County adopt the Employee Down-Payment Assistance Program as a pilot program subject to annual review and appropriation of funds by the Board; and THAT, the terms of the Employee Down-Payment Assistance Program be governed by Exhibit "A" hereto; THAT, to the extent that any inconsistencies exist between the Term Sheet attached to Exhibit "A" and the text of Exhibit "A" itself, Exhibit "A" shall control. THAT, the Board may amend or modify this Resolution or Exhibit "A" or provision contained herein at its discretion through a public hearing and resolution, THAT, the Board of County Commissioners finds, determines, and declares that this Resolution is necessary for the public health, safety, and welfare of the citizens of the County of Eagle, State of Colorado. l\;IOVED, READ AND ADOPTED by the Board of County C~Il}missioners of the County of Eagle, State of Colorado, at its regular meeting held this /'-( day of August, 2007. Clerk to the Board of County Commissioners ~, Commissioner seconded adoption of the foregoing Resolution. The roll having been called, the vote was as follows: Commissioner Menconi Commissioner Runyon Commissioner fisher This Resolution passed by County of Eagle, State of Colorado. vote of the Board of County Commissioners of the G:\Alex Potente\County Wide Down Payment Assist;mce\Eagle County Fund Re~o]L1ti()n 20m.DOC EAGLE COUNTY EMPLOYEE DOWN-PAYMENT ASSISTANCE PROGRAM Revised and Adopted by the Eagle County Commissioners ,2007 EXHIBIT "A" TO RESOLUTION APPROVING EAGLE COUNTY EMPLOYEE DOWN-PAYMENT ASSISTANCE PROGRAM 2 I. PURPOSE The purpose of the Eagle County Employee Down-Payment Assistance Program (hereinafter the "Employee Down-Payment Program") is to provide down-payment assistance to full-time, year- round employees of Eagle County for the purchase of the employee's primary residence in Eagle County. II. DEFINITIONS A. "Eligible Borrowers" mean, and are limited to, natural persons employed year- round by Eagle County for at least 30 hours per week who own no other residential property anywhere at the time of closing on the Eligible Property. B. "Eligible Property" means mobile homes, condominiums, townhomes, duplexes, single family homes, or other code-compliant, habitable residences located within Eagle County. C. "Net Profits" mean the sales price of the Eligible Property less any broker's commission up to three percent of the sales price and any applicable transfer assessment. With the exception of transfer assessments, net profits do not include any applicable taxes or fees on the sale proceeds. Loan losing costs may not be deducted from the sales price in calculating Net Profits. D. "Sham Transactions" means sale of an Eligible Property at less than market value, as determined through an appraisal performed by a County-approved appraiser. III. STAFF ADMINISTRATION AND DISCRETION All loan determinations shall be made by a five-member loan committee composed of the County Manager, one County Commissioner, the Housing Director, the Finance Director, and the Human Resources Director (the "Loan Committee"). The Employee Down-Payment Program shall be administered by Eagle County staff, in consultation with the Loan Committee. A representative from the County Attorney's office shall attend Loan Committee meetings. All discretionary decisions, including, but not limited to all eligibility decisions, shall be made by the Loan Committee. IV. ELIGIBLE BORROWERS Eligible Borrowers must be currently employed at least 30 hours per week by Eagle County. Eligible Borrowers may be given priority for length of service as employees of Eagle County or based on the County's recruiting or retention needs at the Loan Committee's sole discretion. V. ELIGIBLE PROPERTY Eligible Property must be located within Eagle County. At the sole discretion of the Loan Committee, priority may be given to employees within 3 miles of their place of employment; secondary priority may be given to employees within 10 miles of their place of employment. For 3 the 2007 calendar year, the maximum purchase price of an Eligible Property shall be no greater than $549,000. The Eagle County Housing Department shall adjust this amount annually based on median sales prices for the previous calendar year, as contained in the Eagle County Assessor's database. VI. INCOME LIMIT A TIONS The Employee Down-Payment Program imposes no income restrictions on Eligible Borrowers. VII. LOAN AMOUNT AND APPLICATION OF FUNDS The amount of Eagle County's loan assistance through the Employee Down-Payment Program shall not exceed 10 percent of the purchase price of the Eligible Property or $50,000, whichever is less. Loan funds may be used only for down payments, closing costs, and pre-paid items related to the primary loan. VIII. EMPLOYEE CONTRIBUTION Eligible Borrowers must contribute 1 percent ofthe purchase price of the Eligible Property to be qualified for the Employee Down-Payment Program. Preference shall be given to Eligible Borrowers who agree to contribute the greater of $5,000 or 2 percent as total down payment. IX. REPAYMENT AND INTEREST Interest shall accrue at a rate of 3 percent, simple interest, for the initial 24 month period. During this 24-month period, repayment of this fixed-rate interest may be made at any time, and interest payments shall be made only on the outstanding principle. At 24 months the interest rate converts to an adjustable rate. The adjustable interest rate is set retroactively, based on the Eligible Property's sale price, less purchase price. The adjustable interest rate is set so that the ratio of the outstanding loan balance at 24 months to purchase price remains constant. After the loan has converted to an adjustable rate, there is no option for partial or.monthly payments; the loan may be repaid only upon sale of the house, refinance, termination of employment with Eagle County, or expiration of 10 terms ofthe origination of the loan. At the Loan Committee's sole discretion, the County may require repayment upon sale, refinance, termination, or expiration of 10 years from the loan's origination date.] In no event shall the adjustable rate be less than an effective annual percentage rate of 3 percent or exceed interest allowed by law. Any unpaid interest accrued in the first two years shall be added to the total interest paid. For example, assume that an Eligible Borrower purchased a house for $400,000 with a $40,000 loan (10 percent of the purchase price) from Eagle County. Five years later he sold the house for $500,000, after transaction costs (e.g., a 3% seller's share of the broker's commission). He had made no interest payment in the first two years. Interest on the loan would accrue at the ratio of ] The Eligible Borrower shall notify the County of all terms of any proposed refinancing of the Eligible Property. Upon refinancing, the County, at its sole discretion, may require repayment of its loan. Net Profits in such instances shall be determined by an appraisal that Eagle County conducts or approves. 4 loan to purchase price at the time the loan converted (here 10 percent) on the $100,000 Net Profit from the sale, or $10,000, plus any unpaid interest accrued in the first two years (the interest on the $40,000 loan for the first two years would equal $2,400, total), for a total repayment of $12,400 in interest, or an annual effective interest rate of 6.2 percent. Sham Transactions are prohibited. X. RECORDA TION The County shall record a deed of trust on the Eligible Property for the amount of the initial loan and any accrued interest pursuant to the terms herein. XI. PRIORITY AND LOAN TO VALUE The County loan shall be subordinate only to one primary loan on the Eligible Property. At the Loan Committee's discretion, no loan shall be issued subordinate to two or more loans. The value of all loans on the Eligible Property shall not exceed 105 percent of the purchase price of the home at the time of purchase. XII. ANNUAL APPROPRIATION Funds available for the Employee Down-Payment Program shall be subject to annual appropriation. XIII. COUNTY'S RIGHT OF FIRST REFUSAL Eagle County shall have the right of first refusal to purchase an Eligible Property from an Eligible Borrower at Eligible Borrower's asking price for the property or upon default. This right shall be recorded in a deed of trust. The price and sales terms shall be set exclusively by the Eligible Borrower (or by default seller), but must be the same as offered to the general public and set in good faith. Eagle County shall have 30 days to exercise this option after being notified in writing of the pending sale. Notice shall be provided to the following address: Eagle County Attorney Eagle County Building Box 850 Eagle, CO 81631-0850. Five days shall be added for notice provided by fax or mail. XIV. HOMEBUYER TRAINING Homebuyer training is required on all loans, as evidenced by a Fannie Mae, Freddie Mac, HUD or a CHF A-approved provider. XV. ORIGINA TION PROCEDURES 1. Funding Partners, Inc., a non-profit corporation, shall administer the Employee Down-Payment Program. 5 2. Loan Application: Eligible Borrower or his loan representative must submit the Funding Partners' Loan File Checklist to Funding Partners, complete with all documentation shown on the form and any additional documentation required by Funding Partners. 3. Loan Processing: Funding Partners will order the title commitment and evidence of hazard insurance. Final loan documents will be delivered electronically to the Eligible Borrower or his or her loan representative. The Eligible Borrower must comply with any informational and document requests from Funding Partners or Eagle County prior to loan funding. 4. Loan Closing: Funding Partners will deliver closing instructions and loan proceeds directly to the applicable escrow company. Funds transferred by wire should be sent 24 hours prior to the scheduled closing date, so the loan officer must advise of any schedule changes as soon as possible. 5. Fees Collected: Funding Partners will collect an application fee, approved by Eagle County staff, at closing, in addition to the public recording fee for the deed of trust. This information will appear on the applicable HUD 1 Settlement Statement. All settlement figures should appear on a single statement. Funding Partners will review and approve the final statement prior to funding. 6. Requirements: The Eligible Borrower or his representative is required to present all required documents at, or prior to, closing. The Eligible Borrower and his or her loan officer must execute the Lender Certification form, acknowledging disclosure of all loan terms and contact information. 7. Settlement: No changes to loan documents or loan amount shown on the HUDl are permitted. 8. Post Closing: The Eligible Borrower or his or her agent is responsible for recording the original deed by title with all other original loan documents and for returning a copy to Funding Partners via overnight courier. 6 G:\Alex Potente\Down-payment assistance\Eagle County Down-payment assistance Program.doc 7 Eligible Borrowers: Eligible Property: Max Purchase Price: Income Threshold: Loan Amount: Minimum Investment: Repayment and Interest: Right of First Refusal: Other Loan Terms: Eagle County Employee Down-Payment Assistance Program TERM SHEET Eligible borrowers must be currently employed at least 30 hours per week by Eagle County. All applicants are reviewed by a five-member loan committee composed of the County Manager, one County Commissioner, the Housing Director, the Finance Director, and the Human Resources Director. Applicants may be given priority for length of service as employees of Eagle County or based on the County's recruiting or retention needs. These decisions are made at the loan committee's sole discretion. Eligible property must be located within Eagle County. At the loan committee's sole discretion, priority may be given to employees with 3 miles of their place of employment; secondary priority may be given to employees within 10 miles of their place of employment. The maximum purchase price of a qualified residence by an employee in which Eagle County will participate is the annual median house sale price as calculated using the Assessor's data base, i.e. $549,000 in 2007. No income limitations. Assistance from Eagle County will not exceed 10% of the purchase price or $50,000, whichever is less. Eligible Borrowers must contribute I percent of the purchase price of the Eligible Property to be qualified for the Employee Down-Payment Assistance Program. Preference may be given to Eligible Borrowers who agree to contribute the greater of $5,000 or 2 percent as total down payment at the loan committee's sole discretion. Interest shall accrue at three percent, simple interest, for the initial 24-month period, and repayment may be made at any time. At 24 months the interest rate converts to an adjustable rate based on sale price over purchase price. Once the loan has converted to an adjustable rate, it may be repaid at the borrower's option only upon sale of the house or refinance. The County may require repayment upon termination of employment, refinance, or on the loan's ten-year anniversary. Repayment may be required in these circumstances at the loan committee's sole discretion. The adjustable rate shall be no less than an effective annual percentage rate of three percent, and it may not exceed interest allowed by applicable law. Unpaid interest accrued in the first two years shall be added to the total interest paid and shall not be included in determining the adjustable rate. Sales or appraisals at less than market value, for purposes of determining the adjustable rate, are prohibited. A recorded deed of trust shall include a right of first refusal to purchase property in case of sale or default at fair market value. Subject to the exclusive discretion of the loan committee, the loan to value ratio shall not exceed 105 percent, and Eagle County's loan shall be subordinate only to the primary home mortgage.